Double-dip recession risk now at even odds...World Facing 50% Danger of Another Recession, Nobel Laureate Spence SaysAug 25, 2011 - The global economy has a 50 percent chance of slipping into recession as Europe and the U.S. struggle to grow, according to Nobel laureate Michael Spence.

Im quite worried, Spence said in a Bloomberg Television interview in Hong Kong yesterday. A combined downward dip in Europe and America, which is a good chunk of the industrialized economies, Im quite sure will take down growth in China particularly, and that will then immediately spread to the rest of the emerging economies. He put the likelihood of such a scenario at about 50 percent. Spences remarks follow cuts in global growth forecasts by institutions from Citigroup Inc. to UBS AG as central bankers from around the world gather for a Federal Reserve symposium this weekend in Jackson Hole, Wyoming. Unlike the aftermath of the 2008 global financial crisis when China cushioned the blow with a stimulus program, this time it would only be able to buffer its domestic economy, he said.

China cannot make up for the kind of loss of demand that would go with a downturn in the advanced economies, Spence said. Because Chinese inflation is running at an official rate of 6.5 percent, a figure many economists say is understated, Beijing would be pretty close to nuts to fuel further credit growth, he said. Spence, a professor at New York Universitys Stern School of Business who won the Nobel Prize in economics in 2001, said Fed Chairman Ben S. Bernanke, who will speak at Jackson Hole today, has limited room to maneuver.

Awkward Spot

The Fed is in a very awkward spot, where they have limited additional capacity to do much more than prevent a frail economy and a frail financial system from failing, he said. But the expectations of them are so high, and its really the government and the fiscal situation and other things which they dont control that are kind of the main agenda items. Spence said that the Fed could seek to encourage lending in order to help bolster the real-estate market. They could focus more attention -- in their capacity as overseer of parts of the banking system -- on the housing sector, whose weakness is a big sea anchor thats holding the economy back.

Encouraging banks to lend more freely to home buyers or to provide relief to those whose homes are in foreclosure would help unlock consumer spending, he said. I just think weve been dithering on that front and its an important enough component of the problem that maybe the Fed could take a leadership role in focusing attention on it, the Nobel laureate said. The Fung Global Institute yesterday named Spence chairman of its academic board, which oversees the research agenda of the Hong Kong-based independent research institute. He is also a former dean of the Stanford Graduate School of Business in California.

That's because high unemployment could be a warning sign -- and the cause -- of the country falling into a double dip recession. Most economists weren't ready to call a new recession yet. But many were raising the odds of one. They're worried because weakness in the labor market can lead businesses and households to pullback on spending. And that is the worst thing possible for an economy where overall growth has slowed to nearly zero. "When employment drops, incomes fall. When income falls, sales fall. When sales fall, production falls. When production falls, employment falls," said Lakshman Achuthan, managing director of Economic Cycle Research Institute.

It's a tough cycle to break. "You can scream and shout, you can be the President, you can be the Congress, you can be the central bank, you're not going to stop that once it gets going," said Achuthan. Even so, the economy is still technically creating jobs -- albeit very slowly -- and Achuthan thinks the economy would need to actually lose jobs before tipping back into recession. One of the biggest worries from economists is there doesn't seem to be much that will be done to address the weakness.

The Federal Reserve is considering additional support, but even Fed Chairman Ben Bernanke has warned there are limits to what the central bank can do. Bernanke said in a speech last week that Congress needs to step in. Such fiscal stimulus would include either more government spending or more tax cuts. But Republicans and Democrats are having trouble even reaching agreement about what night President Obama can lay out a new jobs plan, let alone agree upon what action should be taken. "There is no political will in Washington...to stimulate the economy," said Carl Riccadonna, senior U.S. economist for Deutsche Bank. "The patient is extremely sick and needs some medicine, but by and large the economy is on its own to work this out."

Of course economists aren't the only ones growing more worried. Consumer confidence experienced the sharpest decline in August since the height of the financial crisis. John Silvia, chief economist for Wells Fargo Securities, said the economy remains at risk as long as most households are struggling with weak wages, rising prices and the loss of household wealth. Silvia puts the chance of a new recession at 30% to 40%, up from 20% to 30% before Friday's jobs report. "A significant number of Americans have never seen a recovery," Silvia said. "We're just skating on really thin ice. We can't take another shot."

People need to quit listening to the rhetoric and excuses made by people getting rich and comfortable on the backs of the common person. While politicians play the blame game people are suffering. Noone in congress, the White House, supreme court, board of directors ,CEOs and upper managers of corporations are suffering. The common person is for a gridlocked, sick system. They all say they sympathize with U. But are they really. Have You heard of any of them willing to give up their comfortable existence to help the common man.

No they are not, they have made all of U suckers by dividing and conquering U. Unite and Topple these power brokers of doom. Only then will they realize u mean business, The leaders that take their place will do better because they know if they don't ,the same will happen to them. Show me a person in congress, the white house , the supreme court, Who is willing to take ur place among the suffering and I will show U an honest person. The people who created the problem are the ones profiting by it, Identify these people and remove them and positive change is created. All preach change but support the status quo. First admitt the system is Sick, then U can make steps to change it.

Corporations can give people Jobs that need it, but profits are 1st and foremost, Show me a CEO or someone in a board of directors willing to give up their income for a year to create jobs and I will show you a good company to work for. They can afford it. Quit listening to the Okee Doke. Force the powers That Be to do the right thing. Unite as a taxpayer and working person that produces. I am not a communist ,I just want a system that works for everyone, not just the rich and powerful. Quit taking that is just the way it is for an answer. Quit saying Yes to greed, Quit hoping that pandering to the rich and powerful will get u a few extra crumbs. quit cleaning their toilets, houses and driving their limos and cars, make them give up something to give someone in need, who wants to work, a job. Simple things like that can make all the difference.

This is why unions are so important. I am willing to give 10% of my income for this if U will. But I will be damned if I will give 10% to someone who has more than I do. Stop, look listen, If the powers that be don't believe, let them investigate me and see how much of my income goes to the less fortunate. wake up and scream I am not taking this BS anymore. They will have no choice but to listen. Make them stop dictating and listen to U.

And U so called Christians, Who are busy supporting Christian institutions an churches that are pandering in our political system. When their leaders are wearing 800 suits, and driving Mercedes or BMW's. Give up ur tithes for one month and give someone a job to cut ur lawn, do housework something to directly improve some elses life, regardlees of thier faith or religous affliation , race, immigrant status, reach out to your muslim brother.

See how fast the war will stop, quit being sheep and take control yourself, don't u think this is what Jesus would want of U, His only commandment is to love thy neighbor as u would love thyself, The power of Love is the greatest power of them all. Honor his death on the cross. Remember Jesus was crucified after he questioned the powers that be. When he challenged the priests, tax collector, or the marketer of goods at the temple in jeruselem

Do U think Jesus would be happy see all the churches built in is honor while people around the world are still killing each other, and people are going without food, losing there homes jobs thru no fault of their own.

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